Key Highlight
- Canada’s housing industry consuming larger share of economy than in any other developed country, according to Bank of International Settlements
- Housing industry also soaking up larger share of investment capital than any of country’s peers
Canadian Housing Sector Driving Country’s Economy
Canada’s housing industry is in the driver’s seat of the Canadian economy. Its housing market, already experiencing record price levels in 2020, splurged ahead in 2021 with annual gains of +30% in many communities across the country.
Canada’s mortgage market has helped create one of the largest consumer debt piles in the world with loan exposure being twice that of the US.
What If Canada’s Home Prices Keep Rising?
According to Demographia, Canada already has two cities within its borders among the ten least affordable cities in the world. Take a look:
- Hong Kong
- Vancouver
- Sydney
- Auckland
- Toronto
- Melbourne
- San Jose
- San Francisco
- Honolulu
- Los Angeles
According to Sal Guatieri, senior economist with the Bank of Montreal, “The housing market is on fire, and there doesn’t seem to be anything to put out the fire…a much greater share of our economy is now devoted to residential construction as opposed to non-residential structures, or just straight spending on machinery and equipment. That fundamentally is not healthy.
Supply Lids, Plunging Interest Rates & Immigration Targets All Lead to White-Hot Demand & Prices
“In Canada,” according to Rod Bolger, the chief financial officer of the Royal Bank of Canada, you have zoning rules that limit development around the major metropolitan areas and that will keep a lid on supply.”
Multi-family housing perennially lags behind demand and the constraints on ground-level housing are even tighter. Regulations limit urban sprawl while large bodies of water hem in billable land on at least one side. In fact, housing inventory throughout Canada is at its lowest level on record
Additionally, plunging mortgage rates continue supercharging the countrywide housing boom. The average rate on a common fixed-rate mortgage was 1.97% on the cusp of 2020-2021. February 2021 posted the largest-ever monthly increase in national benchmark home prices.
Canada also has one of the most welcoming and aggressive immigration targets in the industrialized world. Once newcomers make their way to Canada when pandemic borders are reopened, these people too will need places to live.
Increase in Average Home Values Already Greater than Most Residents’ Annual Income
From British Columbia to Quebec and everywhere in between, Canada’s real estate markets even outside of major metros saw minimum home price increases of no less than +16% and up to +36% in the Kingston area of Ontario, according to multiple real estate associations across the country.
Reuters is expecting Canadian home prices to continue marching higher by an average of +5% nationally throughout 2021. Likewise, Reuters anticipates home prices rising an additional +4% in 2022.
Thanks to Reuters, the Royal Bank of Canada, Bank of Montreal, Demographia, multiple Canadian Real Estate Associations and Bloomberg.
URGENT: 2021 Results Released. New FREE On-Line Web Event Reveals 17 Surprising Secrets Of The Top 100 Millionaire Agents. Get Your FREE Spot For The On-Line Webinar Now. When You Attend This Event You Will Have A Sense Of Relief Knowing You Can FINALLY Laugh At Your Money Worries – If You Follow This Simple Plan. Learn How To Generate 100’s of Motivated Leads Without Coming Off As A Pushy Salesperson and Losing Your Soul. Learn Now How To Become One of the 1000s of Agents Making HUGE Money NOW Who Never Thought They Could.
P.S. Limited Space Available. 235 Spots Left.
